Brazil and Iran Develop New Agribusiness Strategy and Boost Cooperation

Despite economic sanctions imposed by the US, the trade relationship between Brazil and Iran grows as the two countries signed an agreement to export live cattle.

It is estimated that imports will reach 100,000 head a year. The International Relations adviser of the Confederation of Agriculture and Livestock of Brazil (CNA), Pedro Netto, said that the agreement helps to diversify the Brazilian exporting list.

“This agreement with Iran is part of a new agribusiness strategy to try to expand Brazilian agricultural imports and diversify our export agenda,” explained Netto.

In 2017, the importation of live cattle from Brazil generated US $276 million in foreign exchange for the country, while the beef trade generated US $6.28 billion. Iran is also a major partner in the purchase of meat, being the fourth largest Brazilian market. The data are from the Ministry of Agriculture.

According to Pedro, Brazil is still negotiating with other countries, such as Saudi Arabia to expand this type of trade. “In early October the Ministry of Agriculture announced a breakthrough in live cattle trading for Saudi Arabia, which is another market that has a great potential, around 150,000 heads (annually),” he said.

The sale of live cattle to Muslim countries, in general, is for halal slaughter, which obeys the precepts of their religious traditions.

CNA’s international relations adviser also points out that the agreement is a recognition of the work carried out by the Brazilian industry and the government in terms of sanitary treatments.

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“This breakthrough with Iran, which is a large market, is crowning this effort to expand our exports, diversify them, and also broaden the recognition of all the work that the government and Brazilian producers have done in terms of sanitation. Even earlier this year, Brazil was recognized as free of foot-and-mouth disease throughout the country,” explained Netto.

The Brazilian Ministry of Agriculture stresses this type of export is an activity practiced only by countries that have a strict sanitary control of their herds.

The agreement between Brazil and Iran was closed even after the announcement of US sanctions on Iran and should help boost the trade balance between the two countries. Pedro Netto pointed out that Brazilian exports to the country have increased considerably compared to last year.

“American sanctions have not yet come with full force. They are scheduled to take effect early November. We watched mainly from August, when Donald Trump said he will reapply sanctions, a remarkable increase in Brazilian exports. Exports in August, for example, in 2017 were US $170 million. This August was $3 billion,” he said.

The bulk of these exports in August were from the agribusiness sector, with maize exports accounting for $2.9 billion of the total. In the evaluation of the representative of the ANC, this increase indicates an anticipation of the sanctions.

“This indicates a breakthrough in sales to anticipate sanctions. But it is also a reflection of conjunctural actions of the market itself of this product. We had a big crop failure in Argentina and the Brazilian price was very competitive in this harvest,” said the adviser.

Despite the increase in export numbers, Pedro Netto says that he still can not say if Brazil has benefited from the sanctions imposed by the US government.

“This is still very much evolving. We can not know if in the medium or long term we were favored or if this was an anticipation of trade, we will end up having later effects. So it is still very difficult to say that these sanctions favored trade, especially since they still have the potential to be damaging to our exports,” he said.

Paul Antonopoulos is a Research Fellow at the Center for Syncretic Studies. He has an MA in International Relations and is interested in Great Power Rivalry as well as the International Relations and Political Economy of the Middle East and Latin America.